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SECRETS OF AN 18,000-BAGGER 107<br />
deals where we’ll look back 30 years from now and see a return pattern<br />
similar to Berkshire Hathaway.”<br />
He has been studying money managers professionally for two decades<br />
in a consulting role. The leaders of holding companies are, essentially,<br />
money managers with structural advantages in how they invest. They<br />
have permanent capital, unlike, say, a mutual fund manager who must<br />
deal with constant inflows and outflows. Holding companies also build<br />
businesses, as opposed to just buying and selling stocks. This is what really<br />
interests Todd.<br />
He has a passion and enthusiasm for his subject. This is clearly not just<br />
a job or a marketing gimmick. He knows the history of holding companies<br />
and has studied them with rigor. Todd named his holding-company-focused<br />
portfolio the T. F. Ryan Portfolio after financier Thomas Fortune Ryan<br />
(1851–1928).<br />
Ryan is widely considered the creator of the first US holding company,<br />
the Metropolitan Traction Co. His is a rags-to-riches story. Ryan was born<br />
into poverty. By the time he died, though, he was the 10th-richest man in<br />
the country, with a fortune estimated at $200 million.<br />
“I spend my free time studying financiers from the 1860s to 1920s,”<br />
Todd said. When he visits a city, he likes to see whether there is a historic<br />
home he can visit to see who created the wealth in that city.<br />
“I started studying these guys when I was in my teens,” Todd told me.<br />
“I knew about the Vanderbilts, the Rockefellers and Carnegies. But now<br />
I’m looking for the second-, third- and fourth-tier ones that aren’t as well<br />
known. And some of those, to me, are the most incredible stories.”<br />
And not all of these stories end well. Some of these people made a<br />
bunch of money and also lost a bunch. So you get a ton of lessons out<br />
of studying them. Historically, Todd said, there have been five people or<br />
groups he considers holding-company inspirations. Ryan was the first,<br />
chronologically. The Van Sweringen brothers, from Cleveland, followed<br />
him. They at one point owned the most miles of railroad track in the country.<br />
They got crushed in the Great Depression, and their holding company<br />
eventually became Alleghany—another model holding company today.